Court bars Light & Wonder Dragon Train game from U.S.

Tuesday, September 24, 2024 4:06 PM
Photo:  Aristocrat's Lightning Link and Dragon Link games
  • David McKee, CDC Gaming

Aristocrat Technologies hit a courtroom jackpot on Monday. A United States court granted a preliminary injunction against deployment of Light & Wonder’s Dragon Train game, citing intellectual-property issues.

According to Aristocrat, U.S. District Court Judge Gloria M. Navarro barred Light & Wonder from “any continued or planned sale, leasing, or other commercialization of Dragon Train.” It interpreted the court’s decision as: Aristocrat was “extremely likely to succeed in demonstrating Light & Wonder misappropriated Aristocrat’s trade secrets in development of Dragon Train.”

The plaintiff summarized Navarro’s ruling as being a finding that, thanks to misappropriation of trade secrets, Light & Wonder had been “able to develop Dragon Train without investing the equivalent time and money.”

“This ruling underscores the value of our intellectual property and reaffirms our commitment to protecting the integrity of our business,” said Aristocrat Chief Product Officer Matthew Primmer. “We will continue to innovate and invest in cutting-edge solutions, knowing that the law protects our creative efforts.”

Navarro’s injunction isn’t the end of the road for Aristocrat. The company stated it would continue to pursue litigation against Light & Wonder, both in the U.S. and Australia.

“We expect our strong growth trajectory to continue, notwithstanding this decision,” replied Light & Wonder CEO Matt Wilson. His company stuck to 2025 cash-flow guidance of $1.5 billion, adding that Dragon Train represented less than five percent of its projected 2024 cash flow of $1.4 billion. The company also stood by a planned $1 billion stock buyback.

“We respectfully disagree with the judge’s decision and will promptly file an appeal. We will continue to vigorously defend against Aristocrat’s claims, including presenting our defenses to a jury at a trial,” said Light & Wonder executives, in a formal release. We have a diversified portfolio of successful game franchises that are driving our strong performance and growth, of which Dragon Train is only one.”

Remarked Wilson, “We have the best game-design talent in the industry and they are creating great games across all our channels.”

J.P. Morgan analyst Don Carducci was less optimistic. He wrote, “Dragon Train is a significant driver of LNW’s shift in positive sentiment and sales & earnings momentum,” doubting Light & Wonder’s thesis that the game is an insignificant earnings contributor going forward. Carducci trimmed Morgan’s Light & Wonder price target by 12 percent to $103 per share. He continued an Overweight rating on the stock.

The analyst also stood by his prediction that Light & Wonder would achieve mid- to high-single-digit cash-flow growth through 2026. He pegged Dragon Train’s contribution at 40 percent of incremental cash flow in 2o25.

Light & Wonder shares fell over 17.5 percent on the news. At press time, the stock was trading at $92.74 per share. Aristocrat isn’t traded on the New York Stock Exchange.